News

MD&A Year 2007

No. 309

29 November 2007

Subject: Management Discussion and Analysis

To: President, The Stock Exchange of Thailand

Management Discussion and Analysis for fiscal year ended September 30th, 2007 and 2006 for Airports of Thailand Public Company Limited and its subsidiaries

1. Operating results of Airports of Thailand Public Company Limited and its subsidiaries (AOT) for fiscal year 2007
In fiscal year 2007 (October 1st, 2006 - September 30th, 2007), AOT has operating revenues of Baht 19,501.41 million, a year-on-year increase of Baht 3,260.55 million or a 20.08% rise; operating expenses of Baht 17,996.16 million, a year-on-year increase of Baht 8,576.09 million or a 91.04% rise; operating income of Baht 1,505.25 million, a year-on-year decrease of Baht 5,315.54 million or a 77.93% drop, and net profit of Baht 1,094.87 million, a year-on-year decrease of Baht 9,379.12 million or an 89.55% drop, as follows:

Aeronautical Revenues
An increase in aeronautical revenues of Baht 13,145.98 million, a year-on-year increase of Baht 2,905.05 million or a 28.37% rise, mainly due to continuously increasing air traffic growth of all six airports under the supervision of AOT compared with the previous year. The number of aircraft, passenger and cargo movements increased by 11.40%, 7.95% and 0.61% respectively. Low-cost carriers' movements, in especially, represent 27% of total flight volume, a year-on-year increase of 34.34%, and 21.50% of total passenger volume, a year-on-year increase of 31.72%.

An increase in the passenger service charges (PSC) since February 1st, 2007 and the landing and parking charges since April 1st, 2007 is also a part of the increase in AOT's revenues.

However, such negative factor as the violent situation in three Southern Border Provinces has hindered the growth of passenger volume at Hat Yai Airport.

Non-aeronautical Revenues
An increase in non-aeronautical revenues of Baht 6,355.43 million, a year-on-year increase of Baht 355.50 million or a 5.93% rise, due to the unrecognizing of the revenues from duty free and commercial activities at Suvarnabhumi Airport and Regional Airports of King Power Duty Free Plc. and King Power International Plc.since Suvarnabhumi Airport's initial operations on September 28th, 2006. Based on the resolution of the Board of Directors' Meeting No.10/2007 on March 22nd, 2007, the contract was not conducted in accordance with the Public-Private Joint Venture Act B.E.1992, therefore,it was deemed unlawful and was not binding the contracting party. In this matter, AOT would further claim compensation for the unrecognized revenues from those firms.

Operating Expenses
AOT has operating expenses of Baht 17,996.16 million, a year-on-year increase of Baht 8,576.09 million or a 91.04% rise, mainly due to the commercial operations of Suvarnabhumi Airport which resulted in total operating expenses of fiscal year 2007 almost doubling those of the previous year. Depreciation and amortization, in especially,increases by Baht 6,359.45 million or a 454.23% rise.

In addition, interest expenses incurred in fiscal year 2007 of Baht 2,396.71 million (the amount of which was paid for loans borrowed for construction of Suvarnabhumi Airport and Suvarnabhumi Airport Hotel, recognized as assets under construction for fiscal year 2006),and income tax expenses of Baht 1,722.75 million resulted in AOT's net profit for fiscal year 2007 of Baht 1,094.87 million, a year-on-year decrease of Baht 9,379.12 million or an 89.55% drop and the earning per share of Baht 0.77, lower than the previous year which was at Baht 7.33

The comparison between key operating results of the fiscal year 2007 and 2006

Aeronautical Revenues
AOT has aeronautical revenues of Baht 13,145.98 million,a year-on-year increase of Baht 2,905.05 million or a 28.37% rise. The increase is attributable to:

1) Landing and Parking Charges of Baht 3,937.40 million, a year-on-year increase of Baht 468.92 million or a 13.52% rise.

2) Passenger Service Charges of Baht 8,781.48 million, a year-on-year increase of Baht 2,322.02 million or a 35.95% rise.

3) Aircraft Service Charges of Baht 427.10 million, a year-on-year increase of Baht 114.11 million or a 36.46% rise.

Non-aeronautical Revenues
AOT has non-aeronautical revenues of Baht 6,355.43 million, a year-on-year increase of Baht 355.50 million or a 5.93% rise. The increase is attributable to:

1) Office and State Property Rental of Baht 1,524.61 million, a year-on-year increase of Baht 561.89 million or a 58.36% rise, due to the rental charges of property, office and other areas at Suvarnabhumi Airport.

2) Service Revenues of Baht 2,818.54 million, a year-on-year increase of Baht 1,885.82 million or a 202.19% rise, due to check-in services, utilities and hotel services of Suvarnabhumi Airport Hotel, AOT's subsidiaries, with revenues of Baht 677.77 million.

3) Concession Revenues of Baht 2,012.28 million, a year-on-year increase of Baht 2,092.21 million or a 50.97% rise, due to the unrecognizing of the revenues from duty free and commercial activities of King Power Duty Free Plc. and King Power International Plc.

Operating Expenses
AOT has total operating expenses of Baht 17,996.16 million, a year-on-year increase of Baht 8,576.09 million or a 91.04% rise. The increase is attributable to:

1) Operating Expenses of Baht 5,730.13 million, a year-on-year increase of Baht 2,103.36 million or a 58.00% rise, mainly due to the commercial operations of Suvarnabhumi Airport which resulted in an increase in total operating expenses of fiscal year 2007 almost doubling those of the previous year.

2) Repair and Maintenance Expenses of Baht 732.38 million, a year-on-year increase of Baht 454.00 million or a 163.09% rise, due to repairs on baggage handling conveyors, electrical equipment and cooling system, communications and computer equipment,runways/taxiways and sanitary wares.

3) Concession Revenues of Baht 7,759.49 million, a year-on-year increase of Baht 6,359.45 million or a 454.23% rise.

Gain (Loss) on Foreign Exchange
AOT has a gain on foreign exchange of Baht 2,804.54 million, a year-on-year decrease of Baht 1,384.99 million or a 33.06% drop, due to foreign exchange rate adjustments at the end of fiscal year 2007. The difference between the foreign exchange rates of fiscal year 2007 and 2006 is lower than the difference between those of fiscal year 2006 and 2005, resulting in a decrease in the gain of foreign exchange as follows:

Interest Expenses
AOT has interest expenses of Baht 2,397.17 million, a year-on-year increase of Baht 2,357.51 million or a 5,944.30% rise. Interest expenses incurred in fiscal year 2007 to be paid for loans borrowed for construction of Suvarnabhumi Airport and Suvarnabhumi Airport Hotel, are recognized as expenses instead of assets under construction as for fiscal year 2006.

2. The financial statements of Airports of Thailand Public Company Limited and its subsidiaries as of September 30th, 2007
Assets
As of September 30th, 2007, AOT has total assets of Baht 143,476.91 million, a decrease from the end of fiscal year 2006 (September 30th, 2006) of Baht 7,028.15 million or a 4.67% drop. The assets comprise current and non-current assets, which account for 18.68% and 2.07% of total assets respectively. The assets can be elaborated in details as follows:

Current assets have decreased by Baht 4,396.56 million or an 18.68% drop, partly due to a decrease in bank deposit.

Property, plant and equipment-net have decreased by Baht 2,262.39 million or a 1.98% drop, due to the depreciation of Suvarnabhumi airport and Novotel Suvarnabhumi Airport Hotel.

Assets under construction have increased by Baht 1,185.19 million or a 25.38% rise, due to an additional construction work at Suvarnabhumi airport and regional airports.

Liabilities
As of September 30th, 2007, AOT has total liabilities of Baht 73,789.75 million, a year-on-year decrease of Baht 5,551.79 million or a 7.00% drop, which comprise:

Current liabilities (including current portion of long-term loans) have decreased from the end of fiscal year 2006 by Baht 2,994.85 million or a 21.40% drop due to the repayment to contractors who are responsible for the construction of Suvarnabhumi Airport for fiscal year 2007 and the payment of interim dividend for fiscal year 2006.

Long-term loans have decreased from the end of fiscal year 2006 by Baht 3,101.99 million or a 5.55% drop due to the disbursement of loans for the construction of Suvarnabhumi Airport and Novotel Suvarnabhumi Airport Hotel.

Other non-current liabilities have increased from the end of fiscal year 2006 by Baht 545.05 million or a 5.79% rise due to the awaiting recognition of revenues from the contract with private firms.

Shareholders' equity,
as of September 30th, 2007, totals Baht 69,687.16 million, a year-on-year decrease of Baht 1,476.36 million or a 2.07% drop due to an annual dividend payment of fiscal year 2006.

Cash flow position as of September 30th, 2007
Cash and cash equivalents totals Baht 10,231.39 million, a decrease from the beginning of fiscal year 2007 of Baht 9,528.28 million or a 48.22% drop. In short, the details of the sources and uses of funds are as follows:

- Net cash received from operating activities accounts for Baht 5,305.61 million

- Net cash payment for investing activities accounts for Baht 11,698.50 million,mostly in the investment in construction at Suvarnabhumi Airport.

- Net cash received from financing activities accounts for Baht 3,135.39 million,comprising repayment of long-term loan of Baht 1,087.94 million, dividend payment for fiscal year 2006 of Baht 3,928.57 million and an additional disbursement of Baht 1,910.10 million.

Please be informed and further proceed with public disclosure accordingly.

Yours sincerely,

(Porntip Kanchanasat)
Vice President of Accounting Department

Authorized person

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